Research Update: Cirsa's Parent (LHMC Finco 2) Senior Secured PIK Notes To 'D' On Distressed Debt Purchase; Other Ratings Unchanged

In March and April 2020, the Blackstone Group, owner of Cirsa Enterprises SLU (Cirsa), purchased about €120 million face value of LHMC Finco 2 Sarl's outstanding €400 million payment-in-kind (PIK) notes, at a deep discount of their face value. We view the purchases as distressed--rather than opportunistic--because the purchase of the notes (performed by a Blackstone affiliate anonymously via a broker) was at a deep discount of the par value at which the instrument was raised and the purchase accounted for a significant portion of the notes. At the time of the transactions, the issue rating on the PIK notes was 'CCC+', which we then lowered to 'CCC'. We are therefore lowering the issue rating on the PIK notes of

...- In March and April 2020, the Blackstone Group, owner of Cirsa Enterprises SLU (Cirsa), purchased about 120 million face value of LHMC Finco 2 Sarl's outstanding 400 million payment-in-kind (PIK) notes, at a deep discount of their face value. - We view the purchases as distressed--rather than opportunistic--because the purchase of the notes (performed by a Blackstone affiliate anonymously via a broker) was at a deep discount of the par value at which the instrument was raised and the purchase accounted for a significant portion of the notes. At the time of the transactions, the issue rating on the PIK notes was '###+', which we then lowered to '###'. - We are therefore lowering the issue rating on the PIK notes of Cirsa's parent, LHMC Finco 2, to 'D' from '###'. The 'B-' issuer credit rating on Cirsa itself and the issue ratings on Cirsa's issued debt are unchanged. - We intend to assess Blackstone's future financial policy and the scope of any further purchases in the future and, accordingly,...

Research Update